CASE STUDY: OIL AND GAS LOGISTICS CORRUPTION IN NIGERIA In 2010, Swiss freight forwarding company Panalpina was forced to pay a fine of $85 million to the US authorities to resolve a long-running corruption case. Since 2007 the Swiss forwarder and several of its clients in the oil and gas sector have been under investigation for contravening the American Foreign Corrupt Practices Act. Panalpinas customers included Shell, Nabors Industries, Schlumberger, Transocean and Noble Corp. The core of the allegations concerned the bribing of Nigerian customs officials to expedite the movement of oil rig engineering equipment through customs. There were also accusations that Panalpina staff bribed customs officials in Saudi Arabia, Algeria and Kazakhstan. These allegations did substantial harm to Panalpina. Not only did the provisions for fines damage the companys balance sheet, but the company was forced to withdraw from servicing the Nigerian oil fields, losing some of its most lucrative business. The apparent vulnerability of the company to accusations of bribery also raised questions over Panalpinas business ethics, and as a result, the company put in place a compliance strategy. This issue added to the companys woes as it had also just paid $12 million in fines under the US Sherman Antitrust Act and faced investigations in a number of countries, alongside other freight forwarders, over allegations of price-fixing. Corruption in the Nigerian Customs Service is still ongoing. In 2012 the US 3 Securities and Exchange Commission (SEC) charged three oil services executives with violating the Foreign Corrupt Practices Act (FCPA) by participating in a bribery scheme to obtain illicit permits for oil rigs in Nigeria to retain business under lucrative drilling contracts. Rigs can operate in Nigeria based on temporary import permits from the Nigeria Customs Service (NCS). The SEC alleged that former Noble Corporation executives bribed customs officials to process false paperwork purporting to show the export and re-import of oil rigs when in fact, the rigs never moved. The scheme was designed to save Noble Corporation from losing business and incurring significant costs associated with exporting rigs from Nigeria and re-importing them under new permits. Bribes were paid through a Customs agent. (Case Study source: Manners-Bell, 2014)References: Manners-Bell, J. (2014). Supply Chain Risk: Understanding emerging threats to global supply chains. London: Kogan Page Limited. 1. Based on the case study, propose strategies that Panalpina could have employed earlier to proactively mitigate the risks of corruption and bribery?